Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Leidenheimer Corporation manufactures small airplane propellers. Sales for April totaled $850,000. Information regarding resources for the month follows All 3 questions in excel showing

1. Leidenheimer Corporation manufactures small airplane propellers. Sales for April totaled $850,000. Information regarding resources for the month follows

All 3 questions in excel showing all work.

image text in transcribed Exam III 1. Leidenheimer Corporation manufactures small airplane propellers. Sales for April totaled $850,000. Information regarding resources for the month follows: Parts management Energy Quality inspections Long-term labor Temporary labor Setups Materials Depreciation Marketing Customer service Administrative Resources Resources Used Supplied $30,000 $35,000 50,000 50,000 45,000 50,000 25,000 35,000 20,000 24,000 70,000 100,000 150,000 150,000 60,000 100,000 70,000 75,000 10,000 20,000 50,000 70,000 In addition, Leidenheimer spent $25,000 on 50 engineering changes with a cost driver rate of $500 and $30,000 on eight outside contracts with a cost driver rate of $3,750. Required: (33 Points) a. Prepare a traditional income statement. b. Prepare an activity-based income statement. 2. Computer Information Services is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Carol Birch, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Birch is considering three different methods of allocating overhead coststhe direct method, the step method, and the reciprocal method. Birch assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Budgeted Overhead Info Systems (hrs) Facilities (Sq ft) Service User Departments Departments Info Computer Systems Facilitie Program Consult Trainin Total s g $50,000 $25,00 $75,000 $110,0 $85,00 $345,00 0 00 0 0 400 1,100 600 900 3,000 200,000 400,000 600,00 0 800,00 0 2,000,0 00 Information systems is allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. Required: (33 Points) Allocate the service department costs to the user departments using the direct method. (Round to the nearest dollar and provide total user department costs) 3. Bayfield Division of Ashland Inc. has a capacity of 200,000 units and expects the following results. Sales (160,000 units at $4) Variable costs, at $2 Fixed costs Income $640,000 320,000 260,000 $60,000 Washburn Division of Ashland Inc. currently purchases 50,000 units of a part for one of its products from an outside supplier for $4 per unit. Washburn's manager believes he could use a minor variation of Bayfield's product instead, and offers to buy the units from Bayfield at $3.50. Making the variation desired by Washburn would cost Bayfield an additional $0.50 per unit and would increase Bayfield's annual cash fixed costs by $20,000. Bayfield's manager agrees to the deal offered by Washburn's manager. Required: (33 Points) a. What is the effect of the deal on Washburn's income? b. What is the effect of the deal on Bayfield's income? c. What is the effect of the deal on the income of Ashland Inc. as a whole

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Forensic Accounting

Authors: Michael A Crain, William S Hopwood,

1st Edition

1941651100, 978-1941651100

More Books

Students also viewed these Accounting questions

Question

What is a transaction? Why is it important in accounting? lo7

Answered: 1 week ago

Question

Always show respect for the other person or persons.

Answered: 1 week ago

Question

Self-awareness is linked to the businesss results.

Answered: 1 week ago

Question

1. Too reflect on self-management

Answered: 1 week ago